Where do I start measuring COPQ?

Instrument scrap and rework at the point of occurrence, then complaints/returns. Prioritize the top three defects by cost contribution—not by frequency or noise.

How do I prove savings from COPQ projects?

Baseline COPQ, implement fixes under Change Control, and demonstrate sustained improvements in Cpk/OEE/FPY with corresponding cost deltas in the ledger.

Should downtime be counted in COPQ?

Yes, when quality-caused. Attribute OEE losses to specific events and include them in the COPQ ledger.

How do suppliers factor into COPQ?

Track supplier-attributed COPQ, recover costs via SCARs, and control through Vendor Qualification/Supplier Quality Management.

Cost of Poor Quality (COPQ)Glossary

Cost of Poor Quality (COPQ) – Hidden Margin Drain

Q: What’s the difference between COPQ and COQ?

COQ includes prevention, appraisal, and failure; COPQ is failure costs only (internal and external). Track both, but manage COPQ aggressively.

Q: Do regulated investigations inflate COPQ?

They make the real cost visible. Include qualified labor for Deviations/CAPAs, retesting, and release delays.

This topic is part of the SG Systems Global regulatory & operations glossary.

Updated October 2025 • Quality Cost, Lean, Finance • Manufacturing, QA, Operations, Supply Chain

Cost of Poor Quality (COPQ) is the avoidable spend tied to failures in your value stream—scrap, rework, deviations, complaints, chargebacks, recalls, expedited shipments, unplanned downtime, and lost capacity. Strictly, COPQ captures internal and external failure costs; prevention and appraisal belong to the broader Cost of Quality (COQ). In regulated manufacturing, COPQ also soaks up investigation hours, retesting, and release delays under cGMP/QMSR expectations—real cash, real capacity, real risk.

“If it isn’t measured by cause, product, and line, it isn’t COPQ control—it’s wishful thinking.”

TL;DR: COPQ is failure cost you don’t need to spend. Instrument it end‑to‑end (scrap, rework, deviations, CAPA, complaints, returns, expedites, downtime). Attack the biggest drivers with SPC, capability, MSA, and supplier controls—and prove the cash you freed up.

1) What COPQ Covers—and What It Does Not

Covers: failure costs inside the plant (scrap, rework, yield loss, retest, line cleanups, batch re‑runs, OOS/OOT investigations) and outside (complaints, returns, rework at 3PLs, field actions, credits, freight expedites, tech support time). Count downtime and capacity loss via OEE deltas when failure‑driven.

Does not cover: prevention/appraisal (training, inspections, audits) except to show ROI. Don’t pad COPQ with strategic investments—keep the ledger honest.

2) Regulatory, System, and Data Integrity Anchors

COPQ entries must reconcile to controlled records under Data Integrity/audit trail. Scrap/rework events should trace to eBMR, DHR, deviations, and CAPAs; complaint costs to regulated files; holds/releases to Release Status. Protect electronic values with Part 11 controls and governed retention.

3) The Evidence Pack for COPQ

Maintain a COPQ ledger by SKU/line/shift with: event type, quantity, standard cost, variable conversion (labor/energy), materials, disposal fees, expedite/warranty, and link to source records (Deviation, CAPA, complaint). Align ledger roll‑ups to Finance (COGS and margin), and show trend ties to SPC/Cpk improvements.

4) From Event to Ledger—A Standard Path

1) Detect & Contain. Line flags via alarms, checks, or Line Clearance failures.
2) Classify & Quantify. Reason‑coded scrap/rework in MES/WMS with cost.
3) Investigate. Open Deviation, apply RCA.
4) Disposition. Rework, downgrade, or destroy; document under QA.
5) Improve. Close with CAPA and verify via CPV.

5) Internal vs. External Failure Buckets

Internal: scrap, rework, retest, cleaning/flush loss, changeover repeats, label reprints, yield loss (FPY hits), OEE micro‑stops and breakdowns from quality issues.
External: complaints/returns, rework at customer sites, labeling defects, credits, field actions and logistics.

6) Measurement Systems—False Scrap Is Still Scrap

Bad gauges create phantom COPQ. Prove fitness with MSA; align in‑line devices to lab anchors; review bias/linearity routinely; quarantine product if metrology status lapses.

7) Data Integrity—Trust the Numbers or Don’t Ship

Every COPQ entry must be attributable and reconstructable. Keep immutable audit trails, reason codes, approver e‑signatures, and attachments (photos, test data). Archive per Record Retention.

8) Supplier COPQ—Stop Paying Twice

Track incoming defects to suppliers with VQ/SQM. Issue SCARs, recover cost, and block lots in WMS until verified.

9) Process Capability, SPC & CPV

Use SPC and Cpk to quantify escape risk and rework likelihood. Stabilize with limits, runs rules, and CPV; validate changes via Process Validation/PPQ before declaring victory.

10) Labeling & Logistics—Fast Paths to External COPQ

Mislabels and mixed lots drive returns and credits. Enforce Label Verification, scan‑based checks, and pack rules in WMS. Tie failures to COPQ automatically.

11) Release, Holds & Decision Rights

Align QA authority with cost capture. No disposition without complete evidence; holds and downgrades should instantly post to the COPQ ledger via Release Status.

12) Daily Control—Lean Tools That Shrink COPQ

Use Poka‑Yoke, Jidoka, one‑piece flow, Kanban, and Kaizen. Measure OEE and FPY daily; escalate chronic offenders into formal CAPA.

13) Metrics That Expose the Margin Drain

COPQ % Sales/COGS and trend by site/SKU/line.
Scrap & Rework Cost per million units; FPY and yield deltas.
Complaint Cost per 10k units; credits and returns rate.
Deviation/CAPA Cycle Time and recurrence rate.
OEE Loss from Quality (availability, performance, quality components).
Supplier‑attributed COPQ and recovery %.

KPIs must tie to actions. If the metric doesn’t trigger a change, drop it.

14) Common Pitfalls & How to Avoid Them

Burying costs in overhead. Reason‑code everything at the event.
No metrology discipline. Poor gauges inflate or hide COPQ—fix with MSA.
Spreadsheet archaeology. Capture costs inside validated systems with audit trails.
Weak change control. Improvements without Change Control backslide and costs return.
Ignoring suppliers. Unrecovered supplier COPQ is a self‑inflicted margin cut.
Closing deviations late. Delay multiplies the bill; drive fast, effective closure.

15) What Belongs in the COPQ Record

Event ID, product/lot/line/shift, defect category, quantity and cost breakdown, linked Deviation/CAPA/complaint, approvers, photos/data, recovery (supplier/customer), and status. Retain per retention rules.

16) How This Fits with V5 by SG Systems Global

Event‑to‑Cost, Natively. The V5 platform captures scrap/rework in MES/WMS with reason codes, auto‑costs them, and links to Deviation/CAPA and complaints.
SPC & Capability. Live SPC and Cpk trend COPQ drivers and verify savings post‑CAPA.
Governed Evidence. All entries carry audit trails, signatures, and retention; holds/releases in Release Status sync to the ledger.
Bottom line: V5 turns COPQ from a rumor into a governed number—and then drives it down.

17) FAQ

Q1. What’s the difference between COPQ and COQ?
COQ = prevention + appraisal + failure; COPQ = failure only (internal + external). Track both, manage COPQ hard.

Q2. Where do I start?
Instrument scrap/rework at the point of occurrence, then complaints/returns. Prioritize top three defects by cost, not by noise.

Q3. How do I prove savings?
Baseline COPQ, implement fixes under Change Control, and show sustained Cpk/OEE/FPY improvement with corresponding cost deltas.

Q4. Should I include downtime?
Yes—if quality‑caused. Use OEE loss reason codes tied to events.

Q5. Do regulated investigations inflate COPQ?
They reveal the true bill. Count qualified labor for Deviations/CAPAs, retests, and release delays.

Q6. How do suppliers factor in?
Track supplier‑attributed COPQ, recover costs with SCARs, and escalate through VQ/SQM.